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OPEB ACCOUNTING TRANSACTIONS WASBO Accounting Seminar March, 2007 Presented by: Kathy Guralski, School Finance Auditor Wisconsin Department of Public Instruction. Need to know:. Timing of contribution Amount of contribution Annual Required Contribution (ARC) amount

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OPEB ACCOUNTING TRANSACTIONSWASBO Accounting SeminarMarch, 2007Presented by: Kathy Guralski, School Finance Auditor Wisconsin Department of Public Instruction

need to know

Need to know:

Timing of contribution

Amount of contribution

Annual Required Contribution (ARC) amount

Current retiree benefits to be paid

Implicit rate subsidy

Salary OR FTE of employees eligible to receive the benefit

timing of contribution
Timing of Contribution

A contribution to the trust may be made at anytime during the fiscal year but MUST be physically made by June 30th to be accounted for in that same fiscal year ending June 30th.

amount of contribution
Amount of Contribution
  • How a contribution is accounted for and aided will vary depending on the following:
    • A contribution to the trust may be:
      • An amount for the entire unfunded actuarial accrued liability plus normal cost
      • ARC amount
      • Amount less than ARC
      • Amount more than ARC but less than unfunded actuarial accrued liability plus normal cost
annual required contribution arc amount
Annual Required Contribution (ARC) Amount
  • Amount determined by valuation
    • Amortization of Actuarial Accrued Liability
    • Normal Cost
current retiree benefits
Current Retiree Benefits
  • If applicable, what amount your current retirees contribute towards their insurance cost.
  • If applicable, what cost the district incurs for current retirees
implicit rate subsidy
Implicit Rate Subsidy
  • Insurance rates are blended (one rate for all married, single, etc.)
  • Premium rate paid by retirees may be lower than if retiree were rated separately (actives are subsidizing)
  • GASB requires value of the insurance provided retirees (age related) versus blended rate
  • Difference is implicit subsidy rate
employees eligible to receive the benefit and their salary or fte
Employees eligible toreceive the benefit andtheir salary OR FTE
  • Determine who your employees are within the class that are eligible to receive the postemployment benefit being funded
  • Determine the amount of either their salary or FTE
steps for entries

Steps for entries:

Allocation of contribution

Exhibit B

Record contribution in applicable funds

Exhibit C, Entries 1 & 2

Record contribution in fund 73

Exhibit C, #3

Record retiree paid portion of insurance premiums

Exhibit C, #4

Record payment to insurance providers

Exhibit C, # 5, #6, #7, #8 & #9

Record payment for implicit rate subsidy

Exhibit C, #10, #11 & #12

allocation of contribution
Allocation of contribution
  • Only amount up to ARC is eligible for federal/state grants and state categorical aid and may be allocated to appropriate functions
  • Any amount in excess of ARC is to be accounted for in fund 10, function 291000, object 218.
allocation of contribution1
Allocation of contribution
  • Exhibit B
    • Determine who your employees are that are eligible for the benefit
    • Determine either the salary OR FTE of the eligible employees
    • Allocate total contribution to appropriate functions of eligible employees in the plan
record contribution made from applicable funds
Record Contribution Made from Applicable Funds
  • Contribution may be accounted for as a prepaid made at the beginning of the year, accounted for through the payroll system or as a lump sum payment
    • Exhibit C, Entries 1 & 2
    • Exhibit A, #3
slide13
Record Contribution in Fund 73
    • Exhibit C, Entry 3
  • Record Retiree Portion of Insurance Premiums
    • Exhibit C, Entry 4
record payment to insurance providers
Record Payment to Insurance Providers
  • District pays premiums on retirees in combination with active employees
    • Exhibit C, #5
    • Exhibit C, #7
    • Exhibit C, #8
    • Exhibit C, #9
  • Direct retiree payment from trust to insurance provider
    • Exhibit C, #6
record payment for implicit rate subsidy
Record Payment for Implicit Rate Subsidy
  • Exhibit C, #10
  • Exhibit C, #11
  • Exhibit C, #12
  • Exhibit D
borrowing by district to fund opeb
BORROWING BY DISTRICT TO FUND OPEB
  • Borrowing by the district to fund OPEB liability is considered refinancing
  • Exhibit F
    • The contribution to the trust made with borrowed funds is not an expenditure for shared cost or categorical aid
    • Principal and interest payments in future years are costs in determining shared costs
    • Exhibit F
borrowing by trust to fund opeb
BORROWING BY TRUST TO FUND OPEB
  • Exhibit F
    • Debt is reported within the trust
    • Investment earnings remain in the trust to be used for future payment of employee benefits
dpi contacts
DPI CONTACTS

Kathy Guralski

School Finance Auditor

608-266-3862

kathryn.guralski@dpi.state.wi.us

Lori Ames

School Administration Consultant

608-266-3464

lori.ames@dpi.state.wi.us